Malcolm Kidd, Commercial Director for EMEA Monomers, shares his valuable insight into the dynamics of today’s methacrylate monomers market.
Recent developments have provided a strong and timely reminder of the fact that the MMA market has developed over the last decade to become truly global, and will now surely continue to be so in the future. Demand for MMA was strong all the way through 2016, and in all three regions of the world. This has continued as we have moved into 2017. The global supply/demand balance has therefore already been under a degree of tightness for some months. More recently however, and for what is now becoming an extended period of time, it has also been subject to the impact of a number of planned maintenance events and unplanned outages around the world, that have caused the market dynamics to change.
The tightening of the global supply/ demand balance started in the middle of 2016. At this point, exports of MMA (and pMMA) to Europe slowed and prices started to increase, following to some extent the trend of market pricing in Asia. However, whilst the supply/demand balance in the EMEA region was also progressively tightening over the second half of 2016, pricing did not progress sufficiently to continue to attract imports. The global tightness has persisted and exports of MMA from the Americas and Asia to the EMEA region have been reduced over time as there became less and less incentive to do business, and more recently the lack of availability of product to contemplate doing so.
In the EMEA region in 2016, the main applications for MMA of acrylic sheet (cast and extruded) and surface coatings have both presented levels of MMA demand that are among the highest that have been observed over the last decade. It is estimated that the demand for MMA in the EMEA region in 2016 increased by around 2% year-on-year. This is partly due to lower volumes of imports, but also as customers benefitted from the slightly healthier economic situations, and also from favourable trading conditions, notably the weaker Euro. These conditions still prevail in the market today.
The EMEA region structurally requires the import of MMA to meet its normal level of demand. The region was able to cope with the combination of strong demand and a reduced level of imports for a period of time, but only at the expense of depleting the “local” inventory of MMA and derivatives.
However, with the lack of imports now continuing, plus some subsequent further unplanned production shortfalls, the market has been tipped into a more difficult situation in Q1 2017.
While there continues to be much variety in the weather from week to week and from location to location, it has been much more favourable recently compared to the wetter start to the year, which has been a positive. Therefore, overall, for the first six months of the year, the merchant MMA market in the EMEA region is estimated to be running almost 3% ahead of the same period in 2015, and with a positive outlook for the remainder of the year.
The short term outlook is that these market dynamics around the world will continue and that it will take several months for them to be rectified and for inventories to be replenished through the chain. Whilst the events in each of the regions are local and specific, it is the global nature of the MMA industry and the reaction through market forces that have resulted in this situation.
In recognition of the challenging period for the EMEA market, LI has taken the decision to delay the major overhaul of its assets at the Cassel site in the UK, which had been planned for September 2017, to a later date.
Two new MMA assets are scheduled to be brought on line during 2017. MRC’s JV plant in Saudi Arabia (utilising LI’s “Alpha” technology) remains on plan to commence the commercial production of MMA in July, and this will be available to the global market soon thereafter.